Lack of Estate Planning may lead to family squabbles, problems and burdens

Last week, I talked about estate planning — its tools, including its pros and cons. Although I mentioned some vague examples last week, today I'll talk about the how the lack of estate planning now may lead to family squabbles, problems and burdens.

Let me first define Estate Planning once again:

Estate planning is the detailed and systematic study of the personal and financial affairs of a person to help him/her adopt and carry out a plan, for the disposition of properties and earnings that can give the family left behind, maximum benefit and satisfaction.

“You can avoid jealousy and hatred with one stroke of the pen.” - Gerald Sacks

The stories of family relationships destroyed by the lack of wills or unfair distribution of assets are heartbreaking. Despite all evidence to the contrary, people somehow still think that their adult children will be special and manage to work things out which is rarely the case.

What typically happens is that we don't do estate planning because we are not aware of it or because of perceived high consultation costs. Filipinos normally want advice but don’t want to pay for it. It’s not a simple one-advice or solution fits all; not even insurance is appropriate for all scenarios (as discussed last week). The process that we do are as follows:

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* We sit down, determine the sizes of assets

* compute how much the estate tax is

* see & plot the big picture to plan the solution strategy

Only then you could identify ways you can pay less than the estate as well as various obstacles along the way (like properties that are still under the name of your ancestors, inheritance planning and so forth). People will soon realize it’s not easy to settle estate particularly real estate properties and business stakes.No estate planning will one way or another lead to the following:

* Conflict between heirs/relatives – conflicts can lead to family feud that could last for generations & even worse, lead to crimes among blood relatives

* Shrinkage of Estate –Due to Estate Tax payments or penalties.

* Death of business – due to it being sold, mismanaged, or the like scenario.

* D.I.Y (Do-it-yourself) execution errors – although it is good to educate yourself regarding estate planning, there are risks due to bias (hence the need for a professional). Transferring assets or properties too soon may lead to a number of problems such as: loss of control, loss of possession and ownership enjoyment (you could end up homeless), pre-maturely rich heirs (how capable are they in dealing with sudden wealth?)

* Here's a couple of real-life examples:

o School principal kills brother over land feud –Philstar, October 2014